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Monday, 20 April 2009

Business unusual...

Chiwoyu Sinyangwe writes in The Post on living with the global downturn and the imperative of levelling with the Zambian people :

Global crunch: Zambia’s side , Chiwoyu Sinyangwe, The Post (subscription) , Commentary :

The country's economy is battered. The fact has been laid bare. It is so naked for everyone to see!

The mining sector, which is the country's lifeblood is in tatters, burnt by steep collapse in international copper prices. Levels of job losses in the country are frighteningly high.

The statistics are vivid and some analysts are now hunkering down for more job cuts, not only in the mining sector but also in other sectors, as the periods of global recession look longer. In fact, some of the prominent towns on the Copperbelt like Kitwe and Mufulira may soon turn into ghost towns as Mopani Copper Mines (MCM) threatens to shut its mining units in the two towns.

The worst case scenario might come from those companies that input directly in the general mining business.

However, I am not about to start buttressing the already stated predicament, lest I am accused of being a prophet of doom. Truth is the situation is bad.

"It is difficult to explain but it has happened. Me, I can take it but my wife and children can't just bear it," recently retrenched miner Joachim Ng'ambi poignantly said in a telephone interview from the Copperbelt mining town of Chingola.

Ng'ambi is among the more than 12,000 former employees of the mining sector who have had their jobs unceremoniously cut as investors in the country's chief foreign exchange earner mull employment statistics in view of the copper prices which collapsed from the record high of about US $9, 800 per tonne on September 2, 2008 to the around US $2,900 by January this year.

Other sectors too continue to follow the similar pattern.

Doom and gloom seems to hinge the future of the country, a stark departure from hope and vitality that characterised the country a few months ago.

The future to some extent looks bleak! This is exacerbated by the external environment which most indicators and economic analysts contend had now gone into recession and is not expected to be rescued anytime before June 2010 - at least if the current sick global economy responds well to Barack Obama's ambitious medication embedded in the close to US $1 trillion stimulus package.

The World Bank last month released latest global economic projections for this year and this confirms everyone's fears.

"We haven't seen a figure like that globally since World War II, which really means since the Great Depression," World Bank president Robert Zoellick said. "2009 is going to be a very dangerous year. It is indeed serious, and there are issues that go beyond the economic to political and social stability."

These indeed are extraordinarily desperate times.

"It can't be business as usual," Lusaka business consultant Bob Sichinga said in an interview. "We need to take drastic and unprecedented decisions to rescue our economy."

While this is a very apt observation, has anyone bothered to ask how the retrenched miners and other people are surviving the aftermath of this catastrophe?

"This is just so bad because I never planned for it [job losses]," laments Ng'ambi. "I just don't know whether to start a business or go back to the village, I just don't know my next move."

This is the predicament that has befallen the once flourishing and admirable job sectors in the country.

"The most important thing right now is to tell the people the truth. This global economic crunch is here for some time and that the people need to be told in order that they adjust their lives," observes respected Witwatersrand Professor of Journalism Nixon Karithi.

No doubt this recession is going to reshape the country for generations to come, including the way people live and work. What will the future look like? Who will be the winners and losers?

"People should be told reality so that they make adjustments to their livelihoods and prepare adequately for these hard times," Prof Karithi added.

I just don't see that happening at the moment.

It was incredible that while most countries and more resolute citizens of other crisis- hit countries are beginning to engage aggressively in initiatives aimed at making realistic response to the current challenges, I was perturbed the other day to see long queues of stranded women with babies strapped on the backs braving the cruel cold weather and jostling for best positions to get a place into the Mulungushi International Conference Centre for a fortune teller "to predict a bright future for them."

How sad!

Sadly, this was not an isolated incident. To any observer, both critical and casual, the country has seen an unprecedented upsurge in the number of functions and individuals conducting life coaching, motivational speaking sessions and name it, but all in all, giving the people hope beyond the crunch!

It is obvious that anticipation and prediction based solution finders to the current economic crisis are raking a lot of money. My guess right; probably this is the only sector that has seen an upturn in this economic downturn.

I have no doubt [Africans] Zambians have the greatest levels of faith on earth - sometimes, rather credulous than actual "faith."

With due respect to life coaches, motivational speakers and prophets of prosperity, but I think the current problem cannot be solved through issuing rhetoric and sugar coated avowals that are not backed by reality. Not this period.

What is critical at the moment is to inform people on how to adjust their livelihoods and navigate this economic tsunami.

I remember not too long ago the outrage in the country when one of Zambia's most respected and celebrated finance minister Ng'andu Peter Magande deplored the increasing number of vehicles on the road which he said were burning gas "unnecessarily."

"If you stand at Manda Hill robots at 07:00 in the morning, you are amazed at the number of vehicles going into town and these vehicles are only carrying one person when their capacity is average five, and some of these people are not even going to do anything productive in town," Magande said. "We surely need to find a more economic way of using fuel if we are to escape these high [fuel] prices."

Of course Magande's comment came on the backdrop of the then skyrocketing government bill on importing fuel.

The dynamics have no doubt changed but still remain very similar!

Fuel prices have come down drastically lessening the pressure on the government importation bill but thanks to the current global economic psychosis, the expected gains have been reversed.

"Magandenomics" is still valid today as it was last year when the minister proposed it.

It is often said when a hurricane sweeps through a forest it knocks down a lot of the older, weaker trees. The younger ones survive and prosper. And so it may be in the economy. The micro level might just be the key.

It is not ironic to suggest that when an economic crisis of the current magnitude strikes, the greatest and hottest heat is felt by the bottom billion [the majority] - the proletariats.

This is not unique to the public sector as it is very palpable also in private sector.

One just needs to compare the number of executive jobs that have been lost in the current recession with the ordinary jobs!

Are our leaders both in private and public sector organisations doing enough to cushion the bottom majority from this economic tsunami?

Sentiments coming from our leaders are that they don't expect workers to demand a "huge" pay rise this year because of "the current economic crisis."

"I would like to commend president Hakainde Hichilema for urging the workers in the country not to demand for huge pay rise so that they help their employers to deal with this [economic] crunch," loquacious domestic politician and local government minister Benny Tetamashimba was recently quoted in the media commenting on similar calls by United Party for National Development (UPND) leader.

Not that the calls are not ideal and welcome, but the question is: are the leaders ready to take similar positions?

How interesting it would be if leaders and other constitution officer bearers could refund the people of Zambia on the hefty salaries they awarded themselves in the first 30 days of the current administration of President Rupiah Bwezani Banda!

Executives at US giant insurance group, AIG have done it, albeit under public pressure but I guess not in this country.

The moral dilemma for our leaders, both in public and private sector: Do they have the morality to demand from the bottom majority what they cannot give in return?

As I discuss this survival plan, the question that keeps coming to the fore is how Zambia can insulate and protect the majority of the bottom poor and what messages are being communicated to them?

The general questions are; does the country need to keep those hybrid and fuel inefficient vehicles, continue to eat out, spending on non-priority sectors, maintain children in elitist expensive schools, maintain more than one woman, move in tandem with technology by graduating from Iphone to Blackberry, dotcoms the list is infinity.

I am not in any way denouncing such expenditures for those that can afford. I am looking at people who can no longer sustain such expenditures. Personal adjustments are not restricted to the bourgeois or the proliteriate but it is all-inclusive.

Market analysts currently contend that even if the President Obama unprecedented economic stimulus package of close to a trillion dollars were to work miracles in the next few months, the benefits would take at least 12 to 18 months before they trickle down to countries like Zambia.

"What Obama is doing is for Americans. You don't expect President [Obama] to start sorting out issues in other parts of the world before cleaning his own house," commerce minister Felix Mutati recently remarked.

Essentially what that projection means is that we should not expect the local economy to turn around anytime before 2011.

"A significant rebound in commodity prices is not likely before the second half of 2010," international metal analyst Fraser Phillips said in a research note last week.

Citigroup has been warning that copper prices, which have gained over 36 per cent over the past two months, are soon likely to lose steam.

"It is being dominated by a seasonal pattern and will likely be entering a weak phase of that pattern soon," Phillips stated. "We remain cautious."

Amidst all these theories and projections for the economic challenges the world is going through which had not been seen since the great depression of post-first world war era, little is being said about how to survive this economic tsunami at micro level.

Against that high level of uncertainty in the future of the global economic dynamics, I think it is crucial to start preaching radical adjustments to peoples' lifestyles.

This is business unusual!

Whether or not stimulus spending in giant economies should ultimately lead to a strong rebound in the global economy, the trickle down effects in poor economies like ours would remain anaemic for sometime. Best still growth is unlikely and people should better be told that harsh reality so that they do not waste time queuing up and getting soaked trying to crash into the hall(s) to listen to some good preacher or some phony oral based solutions finder. It is not fair!

Africa may not have been party to the ignition of this problem, which started with the governments of the West feeding their people beyond the means and reality, but the continent is engulfed in this problem.

Tell the people the truth!

1 comment:

  1. Africa may not have been party to the ignition of this problem, which started with the governments of the West feeding their people beyond the means and reality, but the continent is engulfed in this problem.
    The real problem is that neoliberalism is a failed economic theory, and that politicians do not want to see it. Africa as a whole may not have started the problem, but the enablers of the IMF are most definitely part of the problem.

    It takes time for them to adjust to the idea that foreign direct investment does not help the economy, if there are no strict guidelines on knowledge transfer, no enforced minimum wage, no demand that only Zambian SMEs act as suppliers, no payment of taxes or sharing of profits, etc. That markets need regulation and do not automatically re-adjust, without sending the entire economy into a tailspin. That 'free markets' for corporate capital do not lead to development, but expatriate billions to anywhere in the world, leaving Zambia to 'find it's competitive advantage' without the benefit of capital to actually expand it's economy, let alone maintain infrastructure. The whole 'jobs instead of profits' idea must go.

    In other words, they have a policy handed down to them by the IMF, and they are only interested in being seen to implement it. They have no stake in the outcome.

    How many politicians have resigned when the mining companies decided that it was in their financial interest to stop mining? How many have resigned over the fraudulent Development Agreements?

    Who is holding the IMF accountable for their demand to privatize Zambia's mines, the most significant singular source of revenues at this point? Zambia has lost over $10 billion in untaxed profits.

    That was money we could have used now, to start infrastructure projects, and expand farming and business, and raise incomes.

    Those miners can easily be put to work in building roads, or be retrained as farmers. A lot of them already have some construction skills. Let's use those skills build the future of the country.

    Then there is government. The government cannot afford this bloated bureaucracy. Let's reduce the number of ministries to 10-12, and expand the role of local government, so more money goes to providing real services, and hire more teachers, doctors, police officers, construction workers, etc.

    Lastly, let's start capacity building in agriculture, so high prices of food can work as an opportunity, to tap into people's daily spending as a source of revenues, by reducing the price of food and increase the amount of food produced at the same time.

    Is there any party or politician that wants to do that - besides dr. Mbita Chitala?Here is an economic philosophy that can replace neoliberalism: Localism.This is a broad philosophy, so the approach should be to pick and choose which ideas fit the Zambian reality closest.


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